The majority of customers believe they are making a good decision because they read media stories and economists’ commentary. However, if you pay attention to great investors like Warren Buffett, you’ll see that the most clever buyers often go against the trend and buy when others think they’re insane. There’s a lot to consider when it comes to the timing of your purchase: your money, your work, the economy, the health of the local real estate market, and a few of other uncontrollable circumstances.
Here’s why we think today is a good time to invest in real estate.
- Prices begin to stabilise. The demand varies greatly depending on the location. Some locations are still experiencing significant demand, though not as much as during the lockdown periods when property listing were limited, but we are still seeing competitive auctions and good numbers at open houses. Property demand in Brisbane, Gold Coast, and Newcastle is drastically different from that in Sydney and Melbourne. Property prices are naturally slowing, but we don’t know how long this will last.
- Rent is skyrocketing. The cost of renting a home is rapidly increasing. According to a research, rents are rising at a rate of about 15% per year on an annualized basis. If you’re an investor, you’d be far better off buying now to get a larger return and ride the wave of rental rises (rather than waiting till rents have risen and competing with thousands of other investors)
- Vacancy rates are quite low. The national vacancy rate is presently less than 1%. A vacant period is one of investors’ pet peeves, but investment property is on demand, with waiting lists in some locations.
- The expense of construction is continuously increasing. The cost of building materials and trade labor is constantly growing, which means the expense of replacing or remodeling your existing home is becoming expensive (ie the physical asset on your land has increased in value due to building price and trade price spikes). Waiting for a market downturn is a false economy, as the additional cost of construction will almost certainly outweigh any potential land price drop.
- The number of building permits issued is decreasing. The property cycle has progressed to the next stage. According to projections, we will have a housing shortage of 163,400 units by 2032. (according to the State of the Nation report). Between now and 2032, around 180,000 additional household formations are expected per year. To put it another way, we are now in a period of general supply shortfall in the property market.
- Opportunity cost. Why wait if you have the financial means to buy now? It takes a long time to receive a financial pre-approval, and you usually only have 90 days to use it before it expires. What if your financial position took a turn for the worse? Would you be able to get the same amount of money from the banks? I’d go ahead and buy right now, taking advantage of any available loan. It is considerably preferable to be a participant in the real estate market rather than a spectator. Property ownership provides you with additional options in life.
If you’re looking to buy a home, an investment property, or a commercial property, book a call with our professional property advisor for a quick chat about your plans.